CDP. Module: Introduction. Page: Introduction. CDP 2014 Investor CDP 2014 Information Request CC0.1

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1 CDP CDP 2014 Investor CDP 2014 Information Request Suncor Energy Inc. Module: Introduction Page: Introduction CC0.1 Introduction Please give a general description and introduction to your organization. In 1967, we pioneered commercial development of Canada's oil sands one of the largest petroleum resource basins in the world. Since then, Suncor has grown to become a globally competitive integrated energy company with a balanced portfolio of high-quality assets, a strong balance sheet and significant growth prospects. Across our operations, we intend to achieve production of one million barrels of oil equivalent per day. Near Fort McMurray, Alta., in the Athabasca region, Suncor extracts and upgrades oil sands into high-quality, refinery-ready crude oil products and diesel fuel. Across Canada and in Colorado, Suncor markets the company's refined products to industrial, commercial and retail customers. In Canada, our network of 1,500 Petro-Canada stations is one of the most customer-recognized, top-volume retailers in the country. We have refineries in Edmonton, Alta.; Sarnia, Ont.; Montreal, Que.; and Commerce City, Colo. Our Lubricants business is the largest producer of quality lubricant base stocks in Canada, with customers worldwide. In Western Canada, across the East Coast of Canada and internationally, Suncor explores for, develops and produces conventional oil and natural gas from both onshore and offshore developments. Suncor is also investing in clean, renewable energy sources. Suncor has six wind power projects in operation with a total capacity of 255 megawatts. These wind power projects are expected to result in the avoidance of approximately 400,000 tonnes of carbon dioxide annually. Suncor operates Canada s largest ethanol facility in St. Clair, Ontario which has a current production capacity of 400 million litres per year. The ethanol is blended into our Petro-Canada gasoline and contributes to avoidance of up to 600,000 tonnes of CO2 emissions per year. 1

2 CC0.2 Reporting Year Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day(dd)/month(mm)/year(yyyy) (i.e. 31/01/2001). Enter Periods that will be disclosed Tue 01 Jan Tue 31 Dec 2013 CC0.3 Country list configuration Please select the countries for which you will be supplying data. This selection will be carried forward to assist you in completing your response. Select country Canada United States of America CC0.4 Currency selection Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. CAD ($) 2

3 CC0.6 Modules As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component manufacture sectors, companies in the oil and gas industry, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco sectors should complete supplementary questions in addition to the main questionnaire. If you are in these sectors (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in the navigation bar when you save this page. If you want to query your classification, please If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below. If you wish to view the questions first, please see Further Information 3

4 Module: Management Page: CC1. Governance CC1.1 Where is the highest level of direct responsibility for climate change within your organization? Individual/Sub-set of the Board or other committee appointed by the Board CC1.1a Please identify the position of the individual or name of the committee with this responsibility i. Committee Name: The Environment, Health, Safety and Sustainable Development Committee of the Board of Directors (EHS&SD). ii. Position in Corporate Structure: The committee holds the highest level of direct responsibility for climate change. CC1.2 Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes 4

5 CC1.2a Please provide further details on the incentives provided for the management of climate change issues Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Chief Executive Officer (CEO) Corporate executive team Business unit managers Facility managers Monetary reward Monetary reward Monetary reward Monetary reward CEO has made the achievement of the 2015 Sustainability Targets one of the 5 value drivers for the corporation. The key goals linked to climate change are a) improve energy efficiency by 10% by 2015 and b) develop 2020 sustainability goals (which includes GHG) Development of environmental strategies and provide resources that drive to meet the 2015 energy efficiency target and support the development of the 2020 sustainability goals. Coordination of resources within the business unit to drive the effort to meet the 2015 energy efficiency target. Implement the projects and operating strategies that help achieve the improvement of energy efficiency to meet the 2015 sustainability targets. Further Information 5

6 Page: CC2. Strategy CC2.1 Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities Integrated into multi-disciplinary company wide risk management processes CC2.1a Please provide further details on your risk management procedures with regard to climate change risks and opportunities Frequency of monitoring To whom are results reported Geographical areas considered How far into the future are risks considered? Comment Six-monthly or more frequently Individual/Sub-set of the Board or committee appointed by the Board Multiple jurisdictions (Canada & U.S.)/Enterprise Wide Approach: Suncor manages climate change risk through its corporate enterprise-wide risk management process (ERM). It is reviewed by the Board of Directors, executive leadership team/environmental health and safety committee of the board. The ERM process addresses the scope and how risks/opportunities are managed at a company and asset level. > 6 years EHS&SD Board Committee: 1)meets quarterly to review effectiveness in meeting our EHS obligations & review effectiveness of EHS policies; 2)on a bi-annual basis, reviews energy intensity perf to goals & GHG regulatory compliance perf; & 3)oversees mgmt syst to implement policies & ensure compliance with them. The CEO holds top exec responsibility for sust issues. VP Sustainability & Communications work with business units & internal technical reps to set operational sustainability goals & assess progress, including energy efficiency, across all areas of the business. The Sustainability group provides guidance/support to various business units in measuring, monitoring, forecasting & reporting emissions perf, as well as implementing & stewarding evn t targets, including energy intensity targets. Business units manage their own GHG regulatory compliance w/ support from the Sustainability team. Resp for managing env t & climate change related issues is a shared resp across the entire co. 6

7 CC2.1b Please describe how your risk and opportunity identification processes are applied at both company and asset level i. Company level Our Enterprise Risk Mgmt (ERM) process, a Finance function, assesses key strategic/business risks for the corp, including climate change risks. The output is reported annually to the Audit Committee of the BOD. The Sustainability group leads an Issues Mgmt process whereby stakeholder & reputational issues assoc with climate change are monitored & actioned. The Env Excellence & Climate Change (EECC) group leads a team responsible for: 1) coordinating company-wide strategy for managing climate change risks/opps; 2) articulating likely climate change public policy context & corresponding risks/opps to the business over the near ( ), medium ( ) & long term ( ); 3) assessing/advising on the assoc regulatory & reputational risks; & 4) incorporating risks/opps related to potential consumer behaviour changes. The EECC team utilizes tools such as an internally developed GHG strategy "roadmap" that applies a scenario-based approach to provide potential future climate change risks/opps. Another tool is the application of an internal forecast price on carbon emissions, prepared annually to (1) support the corp level Business Planning process & evaluation of growth projects & (2) articulate the broader long-term econ, societal & political context. ii. Asset level Business units assess key business risks/opps at the facility level, including climate change, on an annual basis. The output of this process escalates to the corp. ERM process. Potential physical risks posed by the effects of climate change are more adequately addressed at a facility level due to the wide regional dispersion of our assets/facilities. GHG emission forecasts are also developed at the facility level to understand regulatory & product standard risks/opps. Using GHG & carbon price forecasts, business units are provided feedback on the potential impact of the identified risks allowing them to adjust & optimize their planning. CC2.1c How do you prioritize the risks and opportunities identified? Suncor s ERM process employs a corporate risk matrix to assess and prioritize all risks using a common measure of impact and consequence; these risks include reputational, financial and environmental. The output of the ERM process is reviewed annually. To prioritize corp. action to mitigate and rank specific opportunities Suncor uses internal and external marginal abatement cost curves. In addition, Suncor also uses a strategic issues process tool that provides more insight into the non-financial risk related to climate change. The EHS&SD meets quarterly and receives, as required, climate change public policy updates necessary for this committee of the Board to make decisions or provide guidance. The Executive Leadership team receives monthly updates on energy costs and other efficiency indicators used to manage and track progress towards meeting established energy efficiency goals and, as required, climate change public policy updates. 7

8 CC2.1d Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future Main reason for not having a process Do you plan to introduce a process? Comment CC2.2 Is climate change integrated into your business strategy? Yes CC2.2a Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process i. Suncor s business strategy has incorporated aspects of climate change (CC) since the adoption of our CC action plan in This requires us to manage our GHG emissions, develop renewable energy sources, invest in environmental research, use offsets, collaborate on policy dev, educate employees/the public, & increase GHG emissions transparency via effective measurement & reporting on progress. The Executive Leadership Team has integrated these requirements into their review of initiatives that support the plan such as new technology, energy efficiency (EE) & adaptation/mitigation opportunities. Information about these initiatives is also reported internally/externally through our sustainability reporting process. The Environmental Excellence & Climate Change Policy group is responsible for coordinating our strategy for managing CC risks & opportunities (e.g. articulating the likely CC public policy context, assessing regulatory & reputational risks, & potential consumer behavior changes). ii. CC aspects that have influenced our strategy and/or created opportunities include emerging carbon regs, policy frameworks, incentives for renewable & clean energy, & scientific/technological advancements. Adaptation requirements from potential CC related H2O supply stresses in the Athabasca river basin (our oil sands operating region) have also led to implementation of H2O reduction/recycling processes, & pilot projects on industrial wastewater treatment techs on tailings H2O. Additionally, risk of potential restricted mkt access from carbon reg has also influenced our strategy toward upgrading & refining in Alberta (AB). Analysis of carbon intensity (CI) on a life cycle basis shows that oil sands crudes, our primary production source, have a CI that is 5-15% higher than a conventional crude barrel. Closing this gap will result in opportunities to reduce CI, increase ROI through energy cost savings, & invest in tech R&D. iii. Short term (pres-2015) strategy components that have been influenced by climate change include: A) Energy Management System (EMS) implementation - energy use is a major input cost & accounts for the majority of our GHG emissions. Our corporate-wide 8

9 EMS process is an energy audit of each facility to understand improvement opportunities, & installation of real-time monitoring equipment for accurate/informative decision making. This resulted in large decreases in energy use & GHG emissions at our refineries. EMS was introduced at Oil Sands in 2012, and will be completed at remaining major facilities in B) Performance against our corporate EE target to reduce energy input by 10% by 2015 (2007 baseline), with annual incentives stewarded against this goal. C) Regulatory compliance - the AB reg (SGER) requires compliance to a 12% carbon intensity reduction target from a historical facility baseline. This target provides add l incentive for investment in EE & GHG reduction techs. D) Community investment strategies Our community investment program (Suncor Energy Foundation) supports outreach initiatives by non-profit organizations in EE & energy literacy. The program provides funding & other resources to energy & CC projects, and supports academic research, think tanks, and advocacy. iv. The primary long term (2021+) strategy component is our pursuit of a parallel path strategy of directing wealth, generated by our commitment to responsible dev of Canada s oil sands & other conventional energy sources, toward emerging energy solutions for the future. Our investment opportunities in these emerging areas help to understand the operational, commercial & policy frameworks necessary for success, & are driven by: (1) our recognition that new sources of renewable energy are critical to global energy supply & emissions reductions (we operate Canada s largest ethanol facility, by volume, & are partner/operator in 6 winds farms, with 2 new wind projects undergoing reg y approval); (2) generation of wind offsets & emission production credits used to offset compliance costs; (3) our investment in wind-to-battery storage will contribute valuable info to the grid operator related to maintaining grid stability & flexibility through effective energy storage & power flow mgmt. Enhancing grid stability/flexibility & delivering power-on-demand whenever it is needed furthers knowledge of how energy storage & distributed power generation can help to transition energy systems; (4) our belief that long term tech investments in energy storage/distributed power generation might positively impact environmental performance through absolute reductions, & an economic ROI; (5) CC reg, which has encouraged installation of cogen (combined heat/steam for power) at our oil sands facilities, resulting in EE gains; (6) AB reg that provides offset credits for export of surplus power to the grid, benefiting the env t by displacing coal power with cleaner power from natural gas; (7) AB s move to reduce coal based power generation is expected to increase the role of cogen; (8) targeted innovation strategy focused on technologies that reduce the carbon intensity of in situ production; (9) industry collaboration leadership within the COSIA formed in 2011 between 12 corporations to share innovation & IP related to environmental improvement, with a focus on GHG reduction technologies; (11) supporting CCS technology (a critical long-term option for industry-through leadership of ICO2N & participation in the Carbon Capture Project), advancement of research to make CCS cost-effective, & policy support implementation Suncor manages a pilot project evaluating application of oxy-fired boilers to CCS projects, which presents an opportunity to enhance the technology s economic viability & benefit the env t. v. Suncor s strategic competitive advantage opportunities include: (1) our strong position as a producer of low carbon power generation, supplying cogen & wind power to the AB grid, and establishment of a power trading group that can help advance this strategy may provide an advantage as policy frameworks evolve toward incenting renewable energy; (2) our ability & position to implement CCS as economic & technological factors allow; (3) our commitment to invest in all forms of technology, including renewables, offers our shareholders a diversified portfolio of assets. vi. Substantial commitments of resources within Suncor & as a member of COSIA toward innovative tech dev s/commercialization that will decrease emission intensity were made during the reporting year. This was influenced by short & long-term strategy dev s to prepare for policy frameworks, reg y changes & renewable/clean energy dev incentives. Also, in 2013, to comply with Quebec s C&T program, we created an allowance & offsets strategy to invest in the carbon offset mkt, allowing us to benefit from lower cost compliance while supporting continued sustainability & viability of the offset mkt. CC2.2b Please explain why climate change is not integrated into your business strategy 9

10 CC2.3 Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply) Direct engagement with policy makers Trade associations Funding research organizations CC2.3a On what issues have you been engaging directly with policy makers? Focus of legislation Other: Federal climate change regulations in Canada. Cap and trade Corporate Position Support with minor exceptions Support with minor exceptions Details of engagement Suncor is part of a consultation process to implement a proposed Federal level GHG regulation for the oil and gas sector that will be implemented by the Provinces under an "equivalency agreement". The formal consultation process, led by an Environment Canada Process Working Group with representation from both the Provincial regulators, industry associations and industry, including Suncor, met over the past 24 months to work through potential regulatory design. Suncor engages through the Process Working Group, as well as directly with Federal and Provincial regulators. Agreement in principle has been reached on regulatory architecture that requires a GHG intensity reduction from a base line over a period of time. If that intensity reduction cannot be met through physical reductions at the facility, compliance may be achieved through offsets or a payment into a low carbon technology fund. Suncor is a member of the International Emissions Trading Association (IETA). Suncor actively participated within various IETA working groups. They include the Canadian Working Group, California Working Group, and International Working Group. Suncor participates through regular quarterly meetings established by IETA to bring government officials from all environmental ministries of the Federal and Provincial Governments from across Canada together with industry Proposed legislative solution Suncor has been a proponent of the evolving regulation. Suncor believes that technology and innovation is key to achieving deeper, longer term carbon reductions and has been a strong supporter of a technology fund as a compliance mechanism in evolving regulations. With regard to stringency of the reduction target and technology fund contribution price, Suncor has advocated and proposes starting at a moderate level and increasing stringency as technology develops. It is critical to maintain the confidence of investors. Suncor supports the Quebec cap and trade system with the exception of the mechanism used to cover transportation emissions. Most fuel suppliers are small business enterprises, operating on a high volume/small margin basis. The volume, and the expected price volatility, of the transportation allowances necessary to cover their sales is likely to overwhelm any other determinant of profitability. In order to take this element of market risk out of the fuel 10

11 Focus of legislation Energy efficiency Clean energy generation Corporate Position Support Support Details of engagement members in a forum to discuss climate change initiatives. In 2013, the most significant outcome that has resulted from the quarterly meetings is an effort by all provinces and territories to harmonize their respective GHG reporting systems with assistance as requested from an ad-hoc working group in which Suncor is a member. Suncor continues to engage directly with the Government of Quebec related to cap-andtrade system for greenhouse gas (GHG) emission allowances that went into effect in December The Quebec regulations are based on those guiding the Western Climate Initiative (WCI), and economy-wide emissions trading system. The WCI partners (incl Ontario, Manitoba, British Columbia & California) have agreed to cut GHG emissions by at least 15% below 2005 levels by Quebec, (annual avg GHG emissions of about 80 mill tonnes) has its own target to cut emissions by 20% below 1990 levels by Consistent with an approach taken by Calif, Quebec will incl transporation emissions (tail-pipe emissions from vehicles) under its emissions cap in Fuel suppliers will be accountable for covering those emissions through the purchase of allowances. Suncor supports a carbon price on tail-pipe emissions, but has expressed concern that covering this liability under a cap and trade program will impose a variable and volatile cost of compliance on fuel distributors, making cost management very challenging for the sector. Suncor is a member and a board director of the Alberta Energy Efficiency Alliance (AEEA), an organization that seeks to identify and promote opportunities for energy efficiency implementation. This includes advocacy for policy frameworks that support energy efficiency. Through AEEA, Suncor has supported using compliance payments made by industry under Alberta's GHG regulation (Specified Gas Emitters Regulation) for incenting energy efficiency. In , through a coalition of industry and environmental organizations, Suncor engaged Federal and Provincial policy makers on a recommendation to review and prioritize energy efficiency opportunities nationally and determine an action plan to implement. Suncor remains active in progressing wind energy policy discussions. In 2013 (and ongoing), activities are focused on Proposed legislative solution supplier business model, Suncor has proposed a fixed cost approach for transportation sector emissions. Suncor supports energy efficiency with no exceptions. Suncor supports CANWEA`s position. 11

12 Focus of legislation Other: Renewable Fuels Corporate Position Support with minor exceptions Details of engagement supporting efforts through the Canadian Wind Energy Association (CANWEA). CANWEA is progressing policy work in Alberta that examines various clean electricity policies already in place in other jurisdictions, and conducting work towards a made-in Alberta solution, tailored to Alberta s deregulated electricity market. Suncor engages both directly with Provincial regulators, as well as through associations such as CANWEA. As one of Canada s largest biofuel producers, Suncor is an active voice in biofuel policy advocacy. Through both direct engagement with regulators and through leadership at the Canadian Renewable Fuels Association, Suncor continues to support key policy instruments to promote the advancement of a sustainable biofuels industry. Canada has Renewable Fuels Standards at both a Federal and Provincial level. Canada s renewable biofuels industry is quickly maturing and is working to improve its long-term viability as current government support programs directed at first generation biofuels decline. Suncor advocates that new policy support is critical to attracting the investment required to develop advanced renewable energy options and build a self-sustaining advanced biofuel industry in Canada to complement the existing biofuel industry. Proposed legislative solution Suncor supports a Renewable Fuel Standards (RFS) that recognizes the "blend wall" limitations that exist in current vehicle fleets. Additionally, the regulation needs to allow flexibility to deal with regional limitations on blending biodiesel in the winter. Suncor has advocated for a "Smart RFS" that would assign different LCA values to first and next generation biofuels, incenting incremental blending of advanced biofuels. CC2.3b Are you on the Board of any trade associations or provide funding beyond membership? Yes CC2.3c Please enter the details of those trade associations that are likely to take a position on climate change legislation 12

13 Trade association Canadian Association of Petroleum Producers Canadian Fuels Association Is your position on climate change consistent with theirs? Consistent Consistent Please explain the trade association's position Canadians expect responsible development of our oil and gas resources. The Canadian oil and gas industry fully recognizes that it must continue to do its part in addressing GHG emissions and advocates several key principles to guide the development of Canadian climate policy in Canada. Balanced 3E policy should deliver Economic growth, Environmental protection, and a secure and reliable Energy supply. Policy should be designed to drive efficient actions required to achieve emission objectives. Policy should stimulate investment in the technologies necessary for significant reductions in GHG emissions in Canada. Predictable policy built on stable principles should support long term capital investments in the upstream oil and gas sector and create jobs for Canadians. Policy should maintain competitiveness of Canadian industry, ensure compatibility with major trading and economic partners (particularly with the U.S., our largest trading partner), and compliance should be achievable within the context of growing production. Policy should distribute cost burden equitably among sectors and jurisdictions across the economy. Policy should be harmonized across jurisdictions within Canada, to an extent that is reasonable and practical. Policy should be simple and minimize the administrative burden on industry to the greatest extent possible. The Canadian Fuels Association supports climate change/ghg emissions reduction strategies and policies that allow for a clear price on carbon and ensure robust and well-functioning trading/market mechanisms. Policies must maintain a level playing field between jurisdictions, between sectors and within sectors. Refining is an energy intensive trade exposed sector. Maintaining Canadian refining industry competitiveness must be a key principle underpinning any GHG emissions reduction policy. This is best accomplished with a national approach, rather than the current federal/provincial patchwork, and one that is aligned with approaches implemented by our major trading partners, in particular the United States. Moreover, carbon pricing should be instituted as broadly and uniformly across the economy as feasible, with market-based, viable compliance options that provide flexibility and effective cost-containment. How have you, or are you attempting to, influence the position? Suncor is an active participant in the development of policy positions at CAPP. We have over 65 employees representing various working groups and committees, several of which relate to energy efficiency and climate change. Suncor is an active participant through member participation in the development of policy positions at the Canadian Fuels Association. 13

14 Trade association Canadian Council of Chief Executives Energy Policy Institute of Canada Canadian Renewable Fuels Association Is your position on climate change consistent with theirs? Consistent Consistent Mixed Please explain the trade association's position The Canadian Council of Chief Executives has recommended that a carbon price signal is the most powerful incentive for both industry and consumers to conserve energy and enhance efficiency. Coupled with the appropriate policy framework, carbon pricing can lead to innovation and new technologies that have positive outcomes for consumers and position Canadian firms to be suppliers of less carbon-intensive products and services. It s recommendations and principles with respect to carbon policy include: A clear, nationally consistent carbon price across the economy; Start at relatively low levels so as to give time for adjustment and to avoid unnecessary impacts on competitiveness; Revenue raised should fund reductions in other taxes, both to assist vulnerable consumers and to support the competitiveness of Canadian industry, as well as a portion devoted to the development of new technologies; Revenue distribution should be designed to avoid an undue cost burden on any particular region or sector; Transparent costs to Canadians are essential to stimulate smart consumer energy choices. The Institute advocates for a national carbon management policy that addresses the following principles: The key objective should be to reduce carbon All potential carbon management systems must be included Public policy must provide predictability and address competitiveness A carbon policy must stimulate and accelerate investment in carbon reduction technologies A carbon policy must address carbon emissions across all sectors of the economy and across the full value chain from production of energy to consumption. The CRFA does not have a position on climate change legislation. However, it supports those areas of regulation and policy that incent and accelerate the development and deployment of renewable fuels. How have you, or are you attempting to, influence the position? Suncor is an active participant in the development of policy positions at the CCCE. A senior leader participates and contributes to the outcomes at council meetings. Suncor is an active participant in the development of policy positions at EPIC and contributes to the outcomes at meetings. Suncor, as developer of renewable energy projects, generally agrees with regulations and policy positions that support this business. Where such policies result in unduly punitive or operationally impractical consequences for conventional fuels, Suncor generally seeks to educate and propose alternative solutions. 14

15 CC2.3d Do you publically disclose a list of all the research organizations that you fund? No CC2.3e Do you fund any research organizations to produce or disseminate public work on climate change? Yes CC2.3f Please describe the work and how it aligns with your own strategy on climate change The support of academic institutions, think tanks and other progressive institutions aligns with our climate change strategy by providing Suncor with research, analysis, data dissemination and other information that can be used to improve our environmental, social and economic performance in addition to assisting with policy development. Suncor is a sponsor of the following organizations that produce public work on climate change: MIT Joint Initiative on Science and Policy of Global Change whose mission is to 1) Improve knowledge of interactions among human and natural Earth systems, with a particular focus on climate and energy, and of the forces that drive global change; 2) Prepare quantitative analyses of global change risk and its social and environmental consequences; 3) Provide independent assessments of potential responses to global risks, through emissions mitigation and anticipatory adaptation, contributing to improved understanding of these issues among other analysis groups, policy-making communities and the public, and 4) Augment the pool of people needed for work in this area by the education of graduate and undergraduate students in relevant disciplines of economic and Earth science analysis and methods of policy assessment. An interdisciplinary team of natural scientists, social scientists and policy analysts supports this mission, with their efforts coordinated through the maintenance and application of a set of analytic frameworks that integrate the various components of global system change and potential policy response. The Institute of International Sustainable Development (IISD) who provides progressive policy solutions in North America and at the global level that are supported by individuals, companies and governments that have the capacity to take concrete actions. Its work includes: 1) Developing well-designed, market-based mechanisms such as effective emission trading systems to reduce the costs of emission reductions, incentivize the deployment of low-carbon energy technologies and encourage technology transfer to less developed countries; 2) Identifying ways in which trade policy can effectively contribute to climate mitigation efforts and areas of potential conflict between the global climate and trade regimes; 3) Promoting sustainable agriculture and forestry practices to simultaneously enhance carbon storage and reduce vulnerability to the impacts of a changing global climate; 4) Providing intelligence, advice and analysis to governments and private sector clients on the continual evolution of national and international climate policy 5) Designing and implementing tools, actions and policies able to help communities and governments in developed and developing countries prepare for and respond to the impacts of climate change; 6) Understanding the potential for climatic changes to exacerbate social tensions and violent conflicts including the role that adaptation actions may play in either promoting or undermining peacebuilding efforts. The World Business Council for Sustainable Development (WBCSD) - Suncor participates in several focus areas, including their Energy and Climate Focus Area which delivers business input to the design and implementation of the post-kyoto climate architecture through an active involvement into international processes. 15

16 The WBCSD informs the debate through policy and practice focusing on two key areas: 1) Business solutions for moving toward a low-carbon economy with tools that can help companies deliver solutions, internalize carbon costs of mitigation and adaptation, as well as measure and report the impacts of their activities; 2) Policy negotiations to advance the international climate policy debate through an active involvement into multilateral processes, particularly the UNFCCC, but also other organizations such the OECD, the International Energy Agency or the World Bank. Suncor supports the WBCSD as a means to engage with industry leading peers and stakeholders in energy and climate, to address critical industry issues and to share ways to solutions. Exchange of best practices and specific studies are also a helpful way for WBCSD members to progress efficiently in their company specific approaches. Pollution Probe - Suncor s supports Pollution Probe s Climate Change Programme activities, designed to help Canada achieve its current and future climate change targets. Program and research activities focus on the following areas: 1) Maximizing the development of renewable sources of energy, such as wind, solar, small hydro, biomass and geothermal power; 2) Forest management to remove carbon dioxide from the atmosphere; 3) the relationship between climate change and human health; 4) Emissions trading as a more cost-effective approach to dealing with pollution, if it is supported by a good regulatory framework. 5). the development of standards for GHG reporting systems at the international and national levels. CC2.3g Please provide details of the other engagement activities that you undertake CC2.3h What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy? Suncor s Environmental Excellence and Climate Change Policy (EECCP) team has accountability for energy and climate change policy to ensure that all engagement is consistent with overall strategy. This team coordinates all policy related activities, whether direct engagement, or engagement through trade associations. The team has clear principles for climate change policy engagement, and also documents and provides guidance and key messages across organizations. Periodically, where internal conflicts of interest arise between different business units, this team supports reaching an aligned policy position. In addition to cross-functional team collaboration the team also uses the following Suncor tools: stakeholder information management system (SIMS); strategic issues management process (SIMP); operational excellence management systems (OEMS); risk matrix; environmental excellence program (EEP); and other internal policy guidelines and standards, The EECCP team also has an internal network, supported by an internal web site. The teams meet periodically to review climate change policy related activities. CC2.3i Please explain why you do not engage with policy makers Further Information 16

17 Page: CC3. Targets and Initiatives CC3.1 Did you have an emissions reduction target that was active (ongoing or reached completion) in the reporting year? Intensity target CC3.1a Please provide details of your absolute target ID Scope % of emissions in scope % reduction from base year Base year Base year emissions (metric tonnes CO2e) Target year Comment CC3.1b Please provide details of your intensity target ID Scope % of emissions in scope % reduction from base year Metric Base year Normalized base year emissions Target year Comment Int1 Scope 1 90% 10% Other: GJ/M3 of production Suncor s energy intensity goal was publically disclosed in The baseline year chosen was 2007 as 2008 was an inefficient production year which would have made goal achievement easier. This provided a realistic stretch goal for the organization. 17

18 CC3.1c Please also indicate what change in absolute emissions this intensity target reflects ID Direction of change anticipated in absolute Scope 1+2 emissions at target completion? % change anticipated in absolute Scope 1+2 emissions Direction of change anticipated in absolute Scope 3 emissions at target completion? % change anticipated in absolute Scope 3 emissions Comment Int1 Decrease 9 No change 0 Energy intensity goal would impact scope 1 and scope 2 emissions by approximately 90% when translated to tonnes CO2e (from GJ) CC3.1d For all of your targets, please provide details on the progress made in the reporting year ID % complete (time) % complete (emissions) Comment Int1 63% 95% The intent of this goal is to incent each of Suncor s business units to improve its energy efficiency by 10% or greater. Growth production is in our energy intensive business units therefore our corporate energy intensity grows over our goal period, even though each BU is expected to improve its efficiency. CC3.1e Please explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years 18

19 CC3.2 Does the use of your goods and/or services directly enable GHG emissions to be avoided by a third party? Yes CC3.2a Please provide details of how the use of your goods and/or services directly enable GHG emissions to be avoided by a third party i & ii: How emissions are avoided by third parties: A. Cogeneration: Suncor is the 4th largest independent power producer in Alberta, Some Suncor facilities use cogeneration that produces combined heat for steam and power, providing them with considerable energy efficiency gains. These facilities also export a surplus of power to the Alberta provincial power grid, reducing scope 2 emissions of end user power customers by displacing coal power generation with cleaner natural gas generation, B. Wind Energy: Suncor produces renewable wind energy. The use of this power enables end users to avoid scope 2 emissions that would have otherwise been consumed through reliance on fossil-fuel power generation. The wind projects in Alberta, Saskatchewan and Ontario reduces the regional grid intensity factor. C. Biofuels: Suncor s St. Clair, Ontario ethanol plant produces biofuel that is blended into gasoline to reduce the carbon intensity of the fuel purchased by our customers in our downstream operations, thus reducing their scope 2 emissions. Suncor avoids close to 0.6 million tonnes of CO2e per year through the development, deployment and operation of renewable energy facilities. iii. An estimate of the amount of emissions avoided over time: Close to 1 million tonnes of CO2e are avoided by Suncor per year through our Renewable Energy business. This number is made up of our wind operations (approx. 400,000 tonnes CO2e) and ethanol operations (600,000 tonnes CO2e). The emissions avoided have increased over time with the commissioning of our wind farms: and ethanol plant. Our wind facilities started in 2002 with Sunbridge (SK) at 11MW in 2002, Magrath (AB) at 30MW in 2004, Chinchute (AB) at 30MW in 2006, Ripley (ON) at 76MW in 2007, Kent Breeze (ON) at 20MW and Wintering Hills (AB) at 88MW. The Ethanol plant was commissioned in 2006 and expanded in However, as the Alberta grid becomes less GHG intensive with the shift from coal to natural gas, the number of GHG emissions avoided due to the operation of wind located in Alberta will decrease over time. This is related to the AB GHG grid intensity factor which was recently restated by Environment Canada at a lower value than in past years. In addition to the emissions avoided by our renewables business, our cogeneration facilities avoided approximately 2.3 million tonnes CO2e in 2013 based on the difference in GHG intensity between the AB grid and natural gas combined cycle. As the AB grid approaches a GHG intensity equivalent to natural gas, this number will also decrease over time. iv. Methodologies, Emission Factors and Global Warming Potentials: Electricity Grid Factors Environment Canada National Inventory Report, , Part 3, Annex 13 Electricity in Canada: Summary and Intensity Tables Global Warming Potentials Environment Canada Global Warming Potentials For the 2013 reporting year we have used the updated GWP s released in the IPCC fourth assessment report (2007). 19

20 Assumptions Capacity factors for each contributing wind farm are assumed/calculated to be 35% (average of all wind farms). v. Whether you are considering generating certified emissions reductions (CERs) or emissions reduction units (ERUs) within the framework of CDM or JI (UNFCCC): These avoided emissions are not eligible for generating CERs or ERUs as they occurred in Canada and Canada is not a party of the Kyoto Protocol. The wind projects that are situated in Alberta are eligible to produce offsets under the Specified Gas Emitter Regulation and Suncor has developed these offsets and used them as part of our compliance obligation for our Oilsands operation. CC3.3 Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and implementation phases) Yes CC3.3a Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) Under investigation To be implemented* Implementation commenced* 0 Implemented* Not to be implemented 0 20

21 CC3.3b For those initiatives implemented in the reporting year, please provide details in the table below Activity type Energy efficiency: Processes Energy efficiency: Processes Energy efficiency: Processes Energy efficiency: Processes Description of activity Various voluntary North America Onshore (NAO) energy efficiency upgrades to improve efficiency and performance resulting in GHG Scope 1 emission reductions Various voluntary Montreal Refinery energy efficiency upgrades to improve energy efficiency and performance resulting in GHG Scope 1 emission reductions Addition of a hydrocarbon blanket system at Terra Nova to improve vented gas recovery (a scope 1 emission source) Various voluntary Edmonton Refinery energy efficiency upgrades to improve energy efficiency and performance resulting in GHG Scope 1 emission reductions Estimated annual CO2e savings (metric tonnes CO2e) Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period <1 year years <1 year 20 Estimated lifetime of the initiative, years 25 Comment 21

22 CC3.3c What methods do you use to drive investment in emissions reduction activities? Method Compliance with regulatory requirements/standards Dedicated budget for energy efficiency Dedicated budget for low carbon product R&D Dedicated budget for other emissions reduction activities Employee engagement Financial optimization calculations Internal price of carbon Internal incentives/recognition programs Internal finance mechanisms Lower return on investment (ROI) specification Marginal abatement cost curve Partnering with governments on technology development Other Comment Internal environmental goal development CC3.3d If you do not have any emissions reduction initiatives, please explain why not Further Information 22

23 Page: CC4. Communication CC4.1 Have you published information about your organization s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s) Publication In mainstream financial reports (complete) In mainstream financial reports (complete) In mainstream financial reports (complete) In voluntary communications (underway) previous year attached Page/Section reference Annual Report 2013, pp 70 Annual Information Form 2013, pp 69 MD&A 2013, pp Suncor Summary Sustainability Report - Previous year attached Attach the document CDP 2014/Shared Documents/Attachments/CC4.1/Suncor_Annual_Report_2013_en.pdf CDP 2014/Shared Documents/Attachments/CC4.1/Suncor_AIF_2013_en.pdf CDP 2014/Shared Documents/Attachments/CC4.1/Suncor_MDA_2013_en.pdf CDP 2014/Shared Documents/Attachments/CC4.1/se_ROS13_prod_proof_E_WEB.pdf Further Information 23

24 Module: Risks and Opportunities Page: CC5. Climate Change Risks CC5.1 Have you identified any climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Risks driven by changes in regulation Risks driven by changes in physical climate parameters Risks driven by changes in other climate-related developments 24

25 CC5.1a Please describe your risks driven by changes in regulation Risk Driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Uncertainty surrounding new regulation Canadian industry and the Federal regulators are currently reviewing oil and gas sector-specific federal climate change regulation that would be implemented by the Provinces under an equivalency agreement. This regulation is one of a number of sectoral regulations being implemented by the Canadian federal government pursuant to its stated targets under the Copenhagen Accord of 2009 to reduce GHG emissions by 17% over 2005 levels by The proposed regulation would cover Suncor s three oil sands facilities, a refinery in Alberta, a refinery and Lubricants Plant in Ontario, and oil production in the Terra Nova field offshore of Newfoundland. We expect that from 2015 onwards, our Canadian facilities will all be regulated under either proposed Federal regulations, or that the Provinces will have implemented regulations that are deemed equivalent. The regulation is expected to be an intensity-based regulation, requiring a reduction from historical facility baseline intensity. If physical reductions cannot be made at the covered facility, compliance may be achieved through use of offsets, emission allowances, or through payment into a provincial technology innovation fund. The magnitude of the impact on Suncor of this proposed regulation is viewed as Medium High, as compliance payments under the expected regulations, higher costs for new facilities, as well as for retrofits to existing facilities could result in lower shareholder returns. Increased capital cost 3 to 6 years Direct More likely than not Medium-high Existing compliance costs under Alberta regs are under $0.25 /bbl. In 2013 Suncor s total compliance cost including use of offsets & emission production credits amounted to approximately $20M. Future compliance costs for oil sands is estimated to be between $ /bbl. Compliance costs for refineries & offshore oil production are expected to be approx. $0.50/bbl. Emissions from existing assets and future growth production are modelled to assess risks/opps. Method: Intensity reductions through energy mgmt. & tech where possible or compliance payments. Compliance payments to a tech fund that aims to accelerate all forms of low carbon tech innovation (including research into low carbon oil sands extraction techniques) are expected to reduce CO2e emissions. Given the expected timeframe to develop & implement this tech at a commercial scale, significant emission reductions are not expected for another 5-10 yrs. Activities: In the short term, we are working to meet emissions intensity reduction targets through our Energy Mgm t Sys (EMS) at all major facilities. The sys. incl. tools/metrics & accountabilities to track energy use/performance & improvement opportunities. Long term, investments are being made in technologies such as solvent extraction, oxy-fuel combustion, enhanced solvent extraction incorporating electromagnetic heating, tailings management, and CCS to meet expected emission reduction targets for oil sands facilities by We follow a tech innovation roadmap to reduce energy intensity & are a founder/participant in a number of orgs dedicated to low carbon oil sands extraction research/innovation, incl Carbon Mgmt Cda, Oil Sands Leadership Initiative & the Cdn Oil Sands Innovation Alliance. We expect the long term magnitude of impact related to the likelihood of regulation being enacted to remain the same even as we carry out these actions to reduce emissions. Total Energy Mgmt cost for 2013 was $800k plus approx $400k in staff costs. Investment in tech & innovation is to reduce energy input costs or increase production. Both have the impact of reducing emissions intensity and thereby reducing compliance costs. Capital costs associated with install of additional monitoring and measurement equip at our oil sands Base Plant could total $500k in next 24 months 25